Conventional Loans

Government-backed loans often appeal to buyers who might not have perfect credit or who have limited down payment availability. These types of loans are limited to specific amounts depending on the program. Conventional loans often appeal to buyers with stronger credit and income or buyers who need a higher loan amount. offers great rates and terms on a variety of conventional loans throughout Campbell, San Jose, Los Gatos, Santa Clara, Cupertino, Saratoga, Sunnyvale and the surrounding California areas.

A conventional loan by definition is simply any home loan not backed by a government agency. Conventional loans are classified as either a conforming or non-conforming. Conforming loans meet certain criteria set in place by Fannie Mae or Freddie Mac and are eligible for purchase by these entities. Non-conforming loans on the other hand are mortgages that do not meet the requirements and therefore cannot be sold to either of these entities. The size of the loan is the first thing that is looked at when determining eligibility. Loans greater than $424,100 are not eligible for purchase. In certain high-cost areas, loans as high as $636,150 are still eligible.

Historically, a 20% down payment was required for any conventional loan. Conventional loans are becoming increasingly available with significantly lower down payment requirements. Borrowers who can still make a 20% down payment are able to avoid private mortgage insurance (PMI). PMI may be required if a smaller down payment is made, but once 20% equity is reached it can be cancelled by the borrower. Mortgage insurance on government-backed loans such as FHA loans can never be cancelled.

Conventional loans are available as fixed-rate mortgages, adjustable-rate mortgages (ARM), or a combination of the two known as Hybrid ARMs. Buyers will find there are advantages to each type of rate depending on their needs and financial goals.

Fixed-rate mortgages offer financial stability that many homeowners desire. The rate on a fixed-rate mortgage will remain constant throughout the life of the mortgage regardless of what happens in the market. Fixed-rate mortgages are most commonly available as 15-year, 20-year, or 30-year loans.

On the other hand, the rate on an adjustable-rate mortgage fluctuates periodically depending on the market. ARMs will generally start out at a lower rate than comparable fixed-rate mortgages. Buyers who are planning to relocate within a few years may find an ARM to be their best options. Hybrid ARMs are a combination of fixed-rate and adjustable-rate mortgages. A 7/1 Hybrid ARM would begin with a 7-year fixed period. Each year thereafter, the rate is adjusted based on market conditions.

Whether you are looking to refinance an existing home loan, or seeking your very first home in California, has a conventional loan that will meet your needs. For more information on conventional loans in Campbell, San Jose, Los Gatos, Santa Clara, Cupertino, Saratoga, and Sunnyvale, contact us today.